The Challenges of Cross-Chain Transactions and the Solutions Offered by the ERC-7683 Standard

In the context of the thriving multi-chain ecosystem, achieving secure and convenient cross-chain interoperability has always been a major challenge in the blockchain field. As user demand for cross-chain transactions increases, this issue has become increasingly prominent. Currently, cross-chain interactions mainly face the following challenges:

Security Issues

Security is the most critical issue in cross-chain transactions. In recent years, cross-chain bridge protocols that can attract a large amount of assets have become the primary target of hacker attacks.

The cross-chain bridge protocol relies on trusted third-party validators to handle cross-chain transactions. If the number of validators is insufficient, the incentive mechanism is inappropriate, or the trust model is too centralized, hackers may exploit vulnerabilities by attacking the validators to compromise the cross-chain bridge and steal assets. Additionally, vulnerabilities in the smart contracts of the cross-chain protocol itself often serve as entry points for hackers.

On August 6, 2024, a certain cross-chain bridge was suspected to have suffered a hacker attack, resulting in a loss of approximately 12 million USD. In March 2022, this cross-chain bridge experienced a security incident referred to as "the largest loss in DeFi history," where hackers attacked 5 out of 9 validators, stealing over 600 million USD worth of cryptocurrency assets.

High Gas Fees

Cross-chain transactions usually incur higher Gas fees. Users need to pay operation fees on both chains simultaneously, which makes the cost of cross-chain transactions relatively high.

Operational Complexity

Each blockchain network has its own unique consensus mechanism and protocol. This independent operation state between chains leads to users needing to perform complex and cumbersome operations when transferring assets and data across chains. For users who trade frequently, there may also be the risk of asset price slippage, further increasing the difficulty of trading.

To address these challenges, on May 20, 2024, a mainstream decentralized exchange platform and an interoperability protocol jointly proposed the ERC-7683 standard, aiming to simplify cross-chain transaction processes through a shared execution network, enhancing their speed and security.

Overview of the ERC-7683 Standard

The ERC-7683 standard is based on the CrossChainOrder structure, providing an ISettlementContract smart contract interface, which implements a standard API for cross-chain transaction execution systems.

The core technical proposal of this standard is: all "cross-chain intentions" follow the same order structure, which significantly enhances the flexibility and user-friendliness of cross-chain operations.

Application Status

On August 21, 2024, a certain Layer 2 solution announced the adoption of the ERC-7683 cross-chain standard, aiming to achieve efficient transfers of ETH and USDC within its ecosystem and promote broader interoperability of application layers within the Ethereum ecosystem.

It is worth noting that the ERC-7683 standard primarily addresses the API standardization issue of cross-chain transaction execution systems, ensuring consistency in user experience. However, it does not directly solve the problem of insufficient cross-chain liquidity. The effective implementation of the standard requires attracting a sufficient number of active "Fillers" to support users' "cross-chain intentions"; only by forming a wide-area effect can we truly enhance the overall efficiency of cross-chain transactions.

Support from the Ethereum Founder

Ethereum co-founder Vitalik Buterin expressed his support for the ERC-7683 standard through social media. He pointed out that operations based on this standard can include batch transactions, Merkle proofs, and other on-chain activities. Buterin also gave examples of practical application scenarios for the ERC-7683 standard:

"With the ERC-7683 standard, users can paste an ERC-7683 address into their wallet, and with just one click, easily transfer any asset on any chain to another account."

Conclusion

The multi-chain landscape is an inevitable trend in the development of the Web3 era. Optimizing and simplifying cross-chain transactions, and further releasing liquidity, will be key challenges faced by the Web3 world. The ERC-7683 standard directly addresses the pain points of cross-chain transactions and is expected to significantly enhance interoperability between blockchains, having a profound impact on the blockchain world. At this current stage, users can expect the application of the ERC-7683 standard to improve user experience, inject liquidity support into more DeFi projects, and accelerate the development of the entire ecosystem.